IN THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF PENNSYLVANIA 

 : 

LEE ARTERS t/a GREENDALE BUILDERS : CIVIL ACTION - LAW 

 : 

 : 

 Plaintiff, : 

 : 

 v. : 

: No. 02-CV-4388 

ZURICH AMERICAN INSURANCE CO. t/a, : 

ZURICH NORTH AMERICA as successor in : 

Interest to ASSURANCE CO. OF AMERICA, et al. : JURY OF TWELVE (12) 

 : DEMANDED 

 : 

 Defendants. : 

___________________________________________ : 

PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT SUR 

DECLARATORY JUDGMENT ACTION

 AND NOW COMES the Plaintiff and respectfully moves the court to enter an 

Order granting Partial Summary Judgment Sur the Declaratory Judgment action and sets 

forth in support thereof the following: 

 1. Plaintiff, Lee Arters, is an adult individual who trades under the business 

designation Greendale Builders and has a business address located at P.O. Box 216, 

Media, PA 19063. (Lee Arters and Greendale Builders are hereinafter collectively 

referred to as “Greendale”) 

 2. Greendale has engaged in the business of residential construction. 

 3. Defendant, Assurance, is, upon information and belief, a corporation 

organized and existing under the laws of the State of New York with a principal place of 

business located at One Liberty Plaza, 165 Broadway, 53rd Floor, New York, NY 10006. 

Case 2:02-cv-04388-JF Document 18 Filed 09/09/2003 Page 1 of 10
4. Assurance is engaged in the business of providing commercial, property, 

and casualty insurance and is duly licensed by the Commonwealth of Pennsylvania to 

provide such coverage in Pennsylvania. 

5. This Honorable Court has diversity jurisdiction pursuant to 28 U.S.C. § 

1332 as this action involves citizens of different states and the amount in controversy 

exceeds $75,000.00 exclusive of interest and costs. 

6. Venue is appropriate in this judicial district pursuant to 28 U.S.C. § 

1391(a)(2) and (3) since a substantial part of the transactions and occurrences giving rise 

to the claims asserted herein occurred in this judicial district and the Defendants are 

corporations which are subject to personal jurisdiction in this judicial district. 

7. On or before January 19, 1999, Greendale and Assurance entered into a 

valid and binding insurance contract reflected in a Commercial General Liability Policy 

No. SCP34746363 (the “Policy”) a copy of which is attached hereto and made part hereof 

as Exhibit “A”. 

8. The effective period of the Policy was January 19, 1999 through January 

19, 2000. 

9. Pursuant to Section I of the Policy, Assurance obligated itself to Greendale 

as follows: 

A. We will pay those sums the insured becomes legally 

obligated to pay as damages because as “bodily injury” or “property 

damage” to which the insurance applies. We will have the right and duty 

to defend any “suit” seeking those damages ... 

10. In the Policy, Assurance excluded the coverage referenced above from, 

inter alia, the following: 

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d. Workers’ Compensation and Similar Laws 

Any obligation of the insured under a workers’ 

compensation, disability benefits or unemployment compensation 

law or any similar law. 

 e. Employer’s Liability 

Employer’s Bodily Injury to: 

An “Employee” of the insured arising out of and in 

the course of: 

(a) Employment by the Insured; or 

(b) Performing duties related to the conduct of 

the insured’s business ... 

 

11. The term “Employee” is defined in the policy to include a “Leased 

Worker” but not a “Temporary Worker”. 

12. The term “Temporary Worker” is defined in the Policy as “a person who 

is furnished ... to substitute for a permanent ‘Employee’ on leave or to meet short term

workload conditions.” 

13. In or around July 1999, Greendale was contracted as the general 

contractor and primary builder of a residential dwelling unit located at 1776 Ridley Creek 

Road in Media, PA (the “Construction Project”). 

14. Due to the construction demands associated with the Construction Project, 

Greendale was required to seek short-term assistance limited to the Construction Project. 

15. For this purpose, Greendale contacted a vocational school and enlisted the 

assistance of an individual by the name of Thomas Gorman, an independent contractor, 

who identified himself as working for Gorman General Contracting. 

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16. Gorman was enlisted by Greendale to perform work on the Construction 

Project on a temporary, “time and material” basis. 

17. Gorman submitted invoices to Greendale for the work performed. 

18. On or about July 9, 1999, Gorman was injured while operating a power 

saw on the Construction Project (the “Injury”). 

19. On July 20, 2001, Gorman filed a Complaint in the Court of Common 

Pleas of Delaware County, Pennsylvania to recover damages for the Injury against 

Greendale, Lee Arters, Sara Arters, and R.E.I. Consultants, Ltd. (the “Gorman 

Complaint”). A true and correct copy of the Gorman Complaint is attached hereto and 

incorporated herein by reference as Exhibit “B”. 

20. In the Gorman Complaint, Gorman alleges, inter alia, that he was

contacted by Greendale to perform certain labor services on the Construction Project and 

in performing work on the Project, he suffered the Injury. 

21. The Gorman Complaint does not allege that Gorman was an employee of 

Greendale at the time of the injury. 

22. Gorman did not file any claims for workers’ compensation benefits. 

23. Greendale paid all premiums that were required under the terms of the 

CGL Policy and the Policy was in effect at the time of the Injury. 

24. As the insurer, Zurich/Assurance agreed to defend Greendale against any 

suits arising under the terms of Policy, even if such suits were groundless, false, or 

fraudulent. 

25. On October 10, 2001, Zurich/Assurance issued a rejection letter to 

Greendale informing Greendale that coverage was not available under the Policy for the 

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Case 2:02-cv-04388-JF Document 18 Filed 09/09/2003 Page 4 of 10
allegations of the Gorman Complaint. A copy of the letter is attached hereto and made 

part hereof as Exhibit “C”. 

26. For coverage purposes, the allegations of the underlying Complaint must 

be taken as true and liberally construed in favor of the insured. 

27. If the factual allegations of the underlying Complaint against the insured 

state a claim which would potentially fall within the coverage of the Policy, the insurer 

has the duty to defend. 

28. The Gorman Complaint, as drafted, potentially falls within the coverage 

provisions of the insurance policy for the following reasons: 

A. No part of the Gorman Complaint alleges that Mr. Gorman was 

employed as an employee. 

i. Paragraph 11 alleges only that Plaintiff was to “perform

certain manual labor”. 

ii. Paragraph 12 alleges only the “performance of manual 

labor”. 

iii. Paragraph 13 alleges only the performance of “dangerous 

carpentry services for them”. 

iv. Paragraph 14 alleges only that Defendant “obtained the 

services of Plaintiff”. 

v. Paragraph 17 alleges only that “Defendant permitted 

Plaintiff to install doors, etc.”. 

vi. Paragraph 20 alleges only that Plaintiff was using ... the 

saw ... “while performing services for Defendant”. 

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vii. Paragraph 22 alleges only that Plaintiff was operating the 

saw “while performing manual labor on behalf of Defendant”. 

viii. Paragraph 24 alleges only “hiring” of a minor but does not 

allege that it was “as an employee or an independent contractor.” 

Paragraph 24 further alleges that Defendants “permitted the minor to 

operate ...”; that the minor was “allowed to use power tools”; that 

Defendants violated certain laws regarding “employment of the minor” 

(without specificity as to the capacity as an employee or independent 

contractor). 

ix. Paragraph 31 alleges only that the Plaintiff was operating 

and performing manual labor “on behalf” of Defendants. 

x. Paragraph 33 of the Complaint follows the allegations of

Paragraph 24. 

29. The basis of the Defendants’ rejection of coverage is a letter dated October 

10, 2001 attached hereto as Exhibit “D” citing Exclusion 2(d) workers’ compensation and 

similar laws; Exclusion 2(e) and 20: a temporary worker “means a person who is 

furnished to you to substitute for a permanent employee on leave or to meet short term

workload conditions”. 

30. The above declination of coverage was based in part upon the Defendants’ 

obtaining of a statement from Mr. Arters, a copy which is attached hereto as Exhibit “E” 

(Bates stamped by Defendant1

 as ACOA010 through 015) wherein Mr. Arters recited 

(ACOA010) that he was the sole employee of Greendale Builders; that the other jobs 

were subcontracted out, (i.e. whatever Mr. Arters did not do himself); that Mr. Gorman, 

 

1

 Defendant insurance company marked its documents “ACOAxxx”. 

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Case 2:02-cv-04388-JF Document 18 Filed 09/09/2003 Page 6 of 10
the injured person, was a student and that he set his own hours after school and 

sometimes on the weekend; that Mr. Gorman would present a paper every week stating 

how much he was owed; that Mr. Gorman was never hired as a full time employee or any 

permanent basis; that Mr. Gorman received no benefits of any kind (ACOA011); that Mr. 

Arters was 50 to 100 yards away when Mr. Gorman injured himself; that Gorman had 

placed six in a United States National Carpentry Competition; that he supplied his own 

hand tools but the saw on which he was injured was owned by Greendale (ACOA014); 

Tom Gorman was never my employee (ACOA015). 

31. The insurance carrier produced internal documents which provided its 

justification for denial of coverage, none of which was in accordance with the law, to wit: 

A. ACOA158 dated January 24, 2001 indicating among other things 

“There are no coverage issues at this time”. 

B. ACOA159 identifying that “the insured had maintained he 

(Gorman) was hired as an independent contractor and not as an employee of the 

insured. The insured does not have workers’ compensation coverage in effect .... 

If it is found the insured owed the Claimant workers’ compensation benefits, we 

may be able to assert W/C sole remedy as a defense.” 

C. ACOA162 dated January 25, 2001 “... If the CGL Policy 

precludes coverage for BI to employees and the insured has no W/C coverage, we 

could be in a disclaimer situation and before we go forward, the ROR 

(Reservation of Rights) should be first.” 

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D. ACOA167. “Prior to issuing this disclaimer I am going to get an 

I/A (Independent Adjuster) to get a statement from the insured with regard to the 

control he has over the subject, etc.”. 

E. ACOA172. “Rep. received and reviewed the signed statement 

obtained by the independent in this case. Interestingly, the Claimant, Tom

Gorman, presented the insured with a business card ‘Gorman General 

Contracting’ upon the start of his work. This is why the insured is making the 

argument he was hired as an independent contractor. Mr. Gorman was apparently 

quite talented at what he does. He in fact as a junior in high school won first prize 

in the Pennsylvania State Vo-Tech games and finished sixth in the nation ...”. 

“The insured indicated that he did not recall what financial agreement they 

reached before Gorman starting working on the job. There was no formal written 

contract and therefore we are unable to argue statutory employer.” 

F. ACOA173. “I believe there is an argument to make that the 

insured had control over the work which the Claimant did and therefore he would 

be considered an employee. I am forwarding this statement to HO Legal to obtain 

their opinion regarding whether to disclaim or handle under ROR. I believe we 

have enough to disclaim.” 

G. ACOA175. “The Claimant’s attorney has made a demand of 

$850,000.” 

H. ACOA177. “I have received permission from HO to disclaim

coverage on this case on the basis that the minor Plaintiff ‘would have been 

considered an employee of the insured’” (italics supplied). 

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Paragraph 31 A-H references are attached hereto as Exhibit “F”. 

32. Mr. Gorman testified in his deposition, as follows: 

A. From Pages 14/15: That there was no time clock and there was no 

formal system whereby Greendale tracked his hours; Mr. Gorman kept his own 

hours; that he would work on Saturdays and Sundays during the school year and 

during the week if he finished school early. 

B. From Page 14: In so far as being supervised, Mr. Arters would 

show him what had to be done, and then Arters would leave and inspect the job 

when Mr. Gorman was finished. 

C. From Page 16: That in addition to working for Mr. Arters, Mr. 

Gorman worked for others during the year 1999. 

D. From Page 20 : After Mr. Arters told Mr. Gorman what needed to 

be done, Mr. Gorman decided how it was going to be done and how he would use 

the tools to reach the desired end results. Mr. Arters did not tell Mr. Gorman how

to do a job. 

E. From Page 21: Mr. Gorman received no fringe benefits. 

F. From Page 121/122: Mr. Gorman owned the hand tools which he 

used; during the time of this project, he used 60% of his own tools and 40% of 

Greendale’s (power) tools. 

H. From Page 104: Mr. Arters requested Mr. Gorman to recommend 

other workers, but not to be affiliated with Mr. Gorman. 

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10 

 I. From Page 112: The general pattern was that Mr. Arters walked 

through the site with Mr. Gorman, showed Mr. Gorman what had to be done, and 

Mr. Gorman then decided how the job would be done. 

 J. From Pages 101/102: Most of the time Mr. Gorman worked by 

himself, and on occasion Mr. Arters would assist him. 

 K. From Page 99: The general tenor of the way things were done is 

that Mr. Gorman did things “my way” to get things done to an extent, but for 

aesthetic purposes, things were done Mr. Arters’ way. 

 Said depositions pages are attached as Exhibit “G”. 

 32. The above referenced documents demonstrate that there are no genuine 

issues of material fact and that at a minimum the Gorman Complaint potentially falls 

within the CGL coverage and that Defendants must defend this action until it clearly, 

appears, if at all, that facts are presented and found by a fact finder that the claim is 

excluded. 

 WHEREFORE, Plaintiff respectfully requests that the court grant Plaintiff’s 

Partial Summary Judgment Motion on the issue of Defendant’s duty to defend. 

 Respectfully Submitted: 

 VAUGHAN, DUFFY & CONNORS, LLP 

 By: 

 Francis X. Nolan, Esquire, I.D. No. 09237 

 Attorney for Plaintiff 

 102 Pickering Way, Suite 400 

 Exton, PA 19341 

 (610) 524-2100 

Date: September 9, 2003 

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